Manufactured houses are unique in their efficient construction techniques and have opened the door for many people to own a home that otherwise may have struggled to do so. We understand that many are unaware whether they can afford a home and we hope to assist you in starting the process of determining if you’re ready to become a homeowner. Finding out how much house you can afford in today’s market is largely determined by your income and financial history as most home buyers will need to secure a home loan from a bank or financial institution to cover the total purchase price. Although many prospective buyers may have a secure income, it isn’t the only factor lenders use to approve your loan. They view your complete financial picture and determine whether financing a mortgage will be a good investment for them.
While there are varying factors that determine whether you will be approved for a loan or what your interest rate will be, lenders typically want you to have a low percent of your monthly income going toward your debt. To measure this, they generally rely on two guidelines, your “home-debt ratio” and “total-debt ratio”. Home-debt ratio is simply the portion of your gross monthly income (before taxes) that you will be spending on total housing costs, including mortgage payment, tax and insurance. Total-debt ratio is the portion of your monthly gross income that will go toward all of your credit obligations including housing costs, car loans, student loans, credit cards, etc. A 28% home-debt ratio or lower and 36% total-debt ratio or lower are preferred, but these are flexible rates that may vary based on factors such as your credit score, income history and late payment history. Here is a quick table that shows what your home debt ratios and total debt ratios should look like based on your annual income. If your payments will be at or lower than the two right columns, you’re a strong candidate for a loan:
|Annual income||Monthly housing payments (28% home-debt ratio)||All monthly credit payments (36% total-debt ratio)|
The quality and affordability of manufactured homes are unprecedented and we hope to provide you with all of the information you need to make a sound financial decision and enter into the world of homeownership.
Please contact us today to find out more information on how much house you can afford and the mortgage lending process.